Getting past grudges to a cliff deal

Between the hit movie and President Barack Obama’s second Inauguration, Lincoln is in the air in Washington. But maybe it’s time to also remember Grant, who knew war firsthand and had the good sense in victory to let the defeated take home their horses and mules for spring plowing.

Obama won November’s election and as a practical matter is in full control of whether the top tax rates go up Jan. 1 — as already allowed under current law.

This is a Tax Code written in sand after all because George W. Bush — unlike Ronald Reagan — never had the votes to make his cuts permanent a decade ago. It’s worth remembering that the 15 percent capital gains rate only passed on a 50-50 Senate roll call in 2003, with Sen. John McCain (R-Ariz.) voting no and Vice President Dick Cheney having to break the tie. Health care reform seems a landslide by comparison.

But to win the peace and govern, would Obama be smart to also make concessions to get past the resentments of the past four years?

He knows full well that the debt crisis at hand is not just about the fairness of the Tax Code but also the equities of a social safety net that, since welfare reform, has grown not just in cost but also tilts increasingly to the elderly and working families above the poverty line.

Obama greatly accelerated this trend himself when he converted anti-poverty programs like food stamps into engines for his economic stimulus initiatives in 2009. And if he is to preserve the core mission of these benefits, savings will be needed.

The White House would argue that it’s far too early to talk peace terms: This is not yet Appomattox; big battles remain. And since Medicare looms so big in the bargaining, it’s a treacherous situation for Obama because Republicans exploited the issue against Democrats to win the House in the 2010 elections.

The resentments are real. And the hard truth of the past four years is that neither Obama as the nation’s first black president nor Republicans as the keepers of the people’s House felt treated by one another with the respect they deserved.

That said, the Jan. 1 tax increase is already baked in the cake. And while Washington is paralyzed by the big stare down, other crises are also piling up in these last weeks before New Year’s.

Milk prices will spike after Jan. 1 without a farm bill deal. Medicare payments to physicians will fall, affecting the elderly. And there is the very real threat of across-the-board cuts hitting the Pentagon and domestic appropriations.

In each case, bipartisan deals seem possible while moving toward House Republicans on key points — small building blocks but a potential path to progress.

For example, Speaker John Boehner has proposed $200 billion in 10-year savings from adjusting the cost-of-living index for entitlement benefits and federal tax brackets. That $200 billion would come down once adjustments are made to protect low-income Supplemental Security Income recipients. But Obama could accept this change and use the savings to give the elderly a permanent solution to the Medicare physician payment crisis.

In that same Dec. 3 offer, Boehner proposed an additional $300 billion in 10-year savings from discretionary programs. Again, that’s too much for Obama, but he could offer a down payment by agreeing to a percentage cut from the $1.047 trillion omnibus spending bills being drafted by the House and Senate Appropriations Committees.

Finally, the politics are ripe for a five-year farm bill compromise to avert the milk crisis and generate at least $33 billion toward a third request by Boehner: $300 billion in nonhealth care related benefit programs.